Michigan Health Insurance Companies Use Near-Monopolies to Set Prices

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A new study by the Health Care for America Now coalition criticizes the consolidation of the private health insurance industry, saying that it is creating skyrocketing premiums for both patients and employers. The study says that the majority of metropolitan areas–over 94%–are “highly concentrated” according to the Department of Justice. This means that insurers are essentially free to raise premiums or reduce services with impunity.

In Michigan, premiums increased 78% from 2000 to 2007 according to an analysis of private health insurance companies in the state. Wages have increased by only 5%, meaning that insurance premiums have risen 17 times faster than wages. Most areas in the state are “highly concentrated” and there is no real competition to the major private insurance companies. In fact, the state’s biggest health insurer–Blue Cross and Blue Shield of Michigan–controls 65% of the state market. Here in Grand Rapids, Blue Cross and Blue Shield controls 46% of the market while the number two insurer, Priority Health, controls 46%. This gives the two companies 92% market share.

In order to increase competition and effectiveness of the insurance market, the group advocates increased regulation of private insurance companies and the development of a public health insurance plan.

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Author: mediamouse

Grand Rapids independent media // mediamouse.org